Dollar struggles on North Korean nuclear tests; euro shines

London

THE dollar struggled on Monday with a trade-weighted basket approaching a 21/2-year low as North Korea's latest nuclear tests prompted a rush to unwind bets with the euro, the only notable exception to the broad market sell-off.

Both the Japanese yen and the Swiss franc notched up chunky gains against the dollar after news on Sunday of North Korea's sixth and most powerful nuclear test, prompting the United States to warn of a "massive" military response if it or its allies were threatened. "The reaction in the markets is a classic risk-off reaction to the geopolitical events but a notable exception is the continued euro strength," said Neil Jones, head of hedge fund sales at Mizuho Bank Ltd in London.